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REMARKS 



PRESIDENT ELIOT OF HARVARD UNIVERSITY 



THE RECESS COMMITTEE ON TAXATION 

MASSACHUSETTS LEGISLATURE 

OCTOBER 23, 1906 

WITH AN APPENDIX CONTAINING SOME EXTRACTS 
FROM PUBLIC DOCUMENTS 



CAMBRIDGE 

1906 






Gift 
The V 



EEMAEKS 



OF 



PRESIDENT ELIOT OF HARVARD UNIVERSITY 

BEFORE THE RECESS COMMITTEE ON TAXATION, OCTOBER 23, 

1906, WITH AN APPENDIX CONTAINING SOME EXTRACTS 

FROM PUBLIC DOCUMENTS 

Mr. Chairman and Gentlemen of the Committee : — 

There are two ways in this world to carry on the higher educational 
institutions ; only two ways have ever been invented and success- 
fully used. One way is by direct support of the Government. In 
various parts of the world all forms of government have used suc- 
cessfully that direct method of supporting the higher institutions of 
education. That can be done in this country — is done in this 
country. Most of the western states tax themselves heavily every 
year for the support of their universities and of their normal and 
technical schools. That is one method — the direct taxation method 
— always effective, and far the quickest for a new community. 
(See Appendix I.) The other method is the method which was used 
by the first settlers on this spot, the men who came over from Eng- 
land to Massachusetts Bay. You were informed this morning by 
rather a romancing historian that this method was invented in Massa- 
chusetts about the time of the adoption of the Constitution. Here 
is an error of more than a century. The charter given to Harvard 
College in 1650 contains a complete exemption of Harvard College 
"from all civil impositions," including exemption of its students 
and teachers from military service. Moreover, this policy of exemp- 
tion is a part of the only other method — beside direct governmental 
support — of maintaining the institutions of higher education, namely, 
the endowment method. What is the essence of that method? It 
is nothing but offering an inducement to public-spirited, private per- 
sons to give their money, chattels, lands, or buildings for the public 
use called higher education. That is exactly what the settlers in 
Massachusetts Bay offered. They offered the inducement to the pub- 
lic-spirited men and women who were ready to give their private 
money and property to the support of the higher education, that, if 
they did so, then such property should be forever exempted from 
assessment for other public uses. The Government of the Colony 



agreed that the moneys given by private persons for education should 
forever be exempted from assessment for other lower public uses, 
like highways, sewers, courts, and prisons. That is the entire mean- 
ing of the exemption, — private money set aside for public use shall 
not be assessed thereafter for lower public uses or any other public 
uses. (See Appendix II.) 

How successful this policy has been in Massachusetts ! The 
schools, the Normal Schools, Technical Schools, Colleges, and Pro- 
fessional Schools in Massachusetts, both for men and women, are 
unexcelled to this day in the United States. Harvard University is 
the largest, richest, and strongest university in this country at this 
moment, in spite of the fact that there are a dozen state universities 
which have their hands in the public treasury, and have had their 
hands in the public treasury, many of them, for more than a genera- 
tion. Where did the Normal Schools begin? Right here in Massa- 
chusetts and in this State House, through a private benefaction. 
Massachusetts started them. Massachusetts has fed them. What 
state has as good a technical school as Massachusetts in the Insti- 
tute of Technology? What built that? Private money, with the 
aid of the State, — exempted private money, because the State 
agreed that the money given for that great public use should not 
be charged for other lower public uses. 

This, then, is the original, logical, and very productive Massachu- 
setts policy with regard to the support of higher education. Now 
this doctrine and this practice have been accepted by every town in 
Massachusetts which has ever had occasion to consider the question, 
" Can we get a college, or an academy, or a normal school into this 
town?" There never has been a town or city in Massachusetts that 
did not welcome these institutions of higher education. I had occasion 
last spring to refer to the fact that when it was proposed to establish 
one more normal school in Massachusetts, the Legislature, without 
waiting for the advice of the Board of Education which had asked 
for but one, established four new normal schools. Why? Because 
there was such a competition for that one normal school that the 
Legislature found it more convenient to establish four. This, then, 
is a solid fact which I hope will be appreciated by the Committee, 
that this policy for the establishment and support of higher education 
has always, to this day, been believed in and accepted- by the towns 
and cities of Massachusetts. As to Cambridge, the seat of Harvard 
University, the town gave the first land which the College occupied, 
and many times over during the first one hundred and fifty years 
repeated a gift of land to Harvard University. 



Nevertheless, with the growing difficulties concerning taxation in 
general, difficulties which we all admit, difficulties which many of us 
hope this Committee is going to struggle with successfully, there has 
undoubtedly arisen a question about the incidence of this so-called 
burden, the exemption from taxation. Nobody doubts that the 
exemption policy of Massachusetts has been a fruitful and wise 
policy ; but questions have arisen in many minds as to whether it 
would not be better, for example, for Massachusetts to vote annually 
— say — $500,000 a year as direct grants to the institutions of 
higher education rather than to give them this indirect advantage 
•of exemption from local taxation. That might conceivably be a 
question, as Mr. McLeod said, of the incidence of taxation. Let 
me next discuss this incidence of taxation which is suspected to be 
unjust. 

In the first place, I venture to ask your attention to the proposi- 
tion that there is no burden whatever on the towns and cities which 
contain institutions of higher education, — absolutely none ; no 
burden at all, but, on the contrary, enrichment and elevation for all 
the towns and cities in Massachusetts which have the happiness of 
■containing these institutions. 

I have heard to-day and on many days in past years the attention 
•of Committees and Commissions on this subject called to the fact 
that in many of our towns and cities very large amounts of property 
are exempted for churches, colleges, technical schools, etc. ; and 
these large sums are rolled off the tongue with great unction, and it 
sounds as if there were an argument somewhere behind the figures, 
namely, that these large exempted amounts involve some burden. 
For instance, there are $25,000,000 of property returned as exempted 
in the city of Cambridge. It sounds large. Then we are to consider 
that in thirty years more that sum will be $50,000,000 perhaps, and 
in one hundred years $100,000,000. It sounds as if the exemption 
of such large values were going to be a burden. Yet there is not, 
and there will not be, one atom of burden on the city of Cambridge. 
To illustrate — Harvard University owns in one of the wards of 
Cambridge, called Ward 8, from 75 to 80 acres of ground, on which 
there is no taxation. But if Harvard University were not there, 
some one will say, there would be shops and houses all over those 
80 acres, from which large taxes would be derived. In the first 
place, whether those 80 acres would have been profitably occupied 
with houses or shops is guess work. It is extremely doubtful if 
there would have been any more taxable houses or shops in Cam- 
bridge without the College than there are now with the College ; for 



there is still much unoccupied land in the city, as in all Massachusetts 
cities and towns. But some things we do know. For example, we 
know that in Ward 8, where the College is, if you add to the exempted 
area of the College three times as much land all about this exempted 
area, and then take the average value of that total for taxation 
purposes, exempted area and all, one-fourth exempted and the other 
three-fourths taxed, you arrive at a higher average value of land 
than exists anywhere else in the City. Where is the burden? The 
city gets more taxes from that Ward 8 than from any other equal 
area in Cambridge, in spite of, or rather because of, the exemption. 
Is there any burden resulting from the exemption ? On the contrary, 
the city of Cambridge has distinctly profited, so far as taxable values 
go, from the presence of Harvard University with its exempted area 
of 80 acres. 

Secondly, I ask your attention to the effect of the exempted prop- 
erties in different cities and towns of the Commonwealth on the rates 
of taxation in those towns. One would imagine, if the presence of 
exempted values were a burden, that the rate of taxation in towns 
and cities heavily burdened in that sense would be higher, dis- 
tinctly higher, than in towns and cities that had no such exempted 
values, or had much smaller values exempted. If the exemption is 
a burden to the town or locality, surely large exemptions ought to 
result in higher tax-rates ; because all towns and cities are struggling 
after comfortable conditions within their territory, and the tax-rate 
which they find themselves able to collect is presumably a rate which 
gives them the comfortable conditions they desire, — not everything 
they desire, of course, but a fairly comfortable mode of existence. 
Now, as a matter of fact, there is no relation whatever between the 
tax-rate of any city or town and the amount of property exempted 
therein for churches, schools, colleges, technical schools, and chari- 
ties. (See Appendix III.) I will compare together, in the first 
place, the city of Cambridge, which has a population of 97,000, and 
the city of Lowell, which has a population of 95,000. The assess- 
able property in Cambridge in 1905 was $104,000,000. The assessable 
property in Lowell was $72,000,000, or nearly three-fourths of the 
assessable property in Cambridge. Let us look at that fact to begin 
with. It seems that Cambridge has more property per capita than 
Lowell; yet Lowell is full of great factories. That is in itself a 
favorable indication that Cambridge is on the whole pretty well off 
in regard to the amount of her assessable property. This is not an 
isolated fact. In Amherst, Northampton, and Williamstown, three 
towns whose condition has been represented before the Committee as 



singularly unfortunate, the percentage of their taxable property to 
the taxable property in the counties in which they are severally 
situated is higher than the percentage of their taxable individuals to 
the total of taxable individuals in their respective counties. (See 
App. IV and VI.) But how about the exempted property in those two 
cities ? In Cambridge there are exempted, according to the returns 
of the assessors, $25,000,000 and upwards. In Lowell there are only 
$3,000,000 exempted, less than an eighth part of the Cambridge 
exempted value. What a tremendous advantage Lowell must have, 
if the exemption is a burden. Is there any escape from that logic? 
If there is any connection at all between low exempted values and a 
low rate of taxation, what an advantage Lowell must have over 
Cambridge with exempted property of only about $3,000,000, when 
Cambridge has exempted property of about $25,000,000. What is 
the fact about the tax-rates? In Cambridge in 1905 it was $19, in 
Lowell $20; in 1906 in Cambridge it was $18.60, in Lowell it was 
$19.60. How, then, is it possible to believe that the exemption 
brings a burden upon the community where that exemption takes 
effect? 

Let me compare two other places of about equal population, 
Amherst and Easthampton. Easthampton has rather more people. 
It has slightly more assessable property, almost $200,000 more ; but 
Easthampton has only $584,000 exempted property, whereas unfortu- 
nate Amherst has nearly $3,000,000 exempted. This must be a 
tremendous burden on Amherst according to the theor}^ we have heard 
here to-day. But what are the tax-rates ? In Amherst it was $16.25 
in 1905, and the same rate in 1906; in Easthampton it was $17 
each year, or higher than in Amherst. Does anybody suppose that 
Amherst does not live as well as Easthampton? Those who visit 
the two towns know better than that. 

Now let us compare Williamstown with Provincetown, two 
towns approximately equal in population. Williamstown has 
about $3,000,000 of assessable property, and Provincetown nearly 
$2,000,000 ; but the unfortunate Williamstown has over $2,000,000 
of exempted property, whereas the fortunate Provincetown has only 
$50,000 of exempted property. Some one said it was best to 
compare such figures in percentages. The exempted property in 
Williamstown is 70% of the assessable property, whereas in Province- 
town the exempted property is only 2$% of the assessable property. 
What a great disadvantage Williamstown must be under ! Yet the 
tax-rate in Williamstown in 1905 was $18.80, and in Provincetown 
$20 ; and in 1906 in Williamstown it was $18.70, and in Provincetown 



$19.50. Again the lower rates in the town where a college is situated, 
and which has exempted property amounting to 70% of its assessable 
property. It is a significant fact, considering the lamentable picture 
painted here of the condition of Amherst and Northampton, that 
both towns had tax-rates in 1904 lower than the average tax-rate in 
Hampshire County. 

I will put this matter in one other form. Cambridge is said to 
have $25,000,000 of exempted property. Now suppose some bene- 
factor or benefactors should give Harvard University to-morrow 
$20,000,000. Much of that sum would ultimately get into Cam- 
bridge as exempted property in buildings, collections, and appara- 
tus ; but the assessable property in Cambridge would not be dimin- 
ished, but on the contrary much increased, because the University 
would be made richer and better and would have more teachers, 
students and workmen whose expenditures would increase the busi- 
ness done in the city and therefore its tax receipts. We are now 
looking for the great Gordon McKay bequest of $5,000,000, and we 
know some of that must go into such "plant." Now will the 
"burden" on Cambridge be increased when that Gordon McKay 
bequest comes in? Its assessable property will not be diminished. 
In what possible way will the " burden " of Cambridge be increased? 
In no way. On the contrary, there will be a larger, better equipped, 
more resorted to, educational establishment in Cambridge, and the 
city will receive an increase of the many benefits which it now derives 
from the University. (See Appendix V.) 

I was anxious to make as clear as I could this proposition that 
the towns and cities in which there are large exemptions for churches, 
hospitals, colleges, etc., have absolutely no burden to bear, — none. 
That is the logic of the situation ; moreover, it is the result of expe- 
rience, the experience of Massachusetts since 1630. 

I now want to touch upon some matters of detail which were 
referred to this morning by the advocates of this little bill. I am 
sure the Committee perceive clearly that this is a limited attack, on 
a small scale, on a principle and method of eminent significance and 
value ; it is a petty attack on a principle which has made Massa- 
chusetts what it is. It is an attack on only three sorts of college 
property, — professors' houses, dormitories, and dining-halls. I have 
heard nothing said lately about taxing dining-halls ; probably because 
a good many difficulties have occurred to the advocates of this 
measure in regard to taxing college, academy, and seminary dining- 
halls. The question was asked repeatedly this morning : " Why not 
tax a professor's house or president's house if you tax a parsonage 



or priest's house? You do tax a parsonage or priest's house; why 
not tax, therefore, the president's house or the professor's house?" 
That is a fair question ; but the answer is very plain. The parsonage 
or priest's house is not necessary to the church. A church can always 
get along very well without owning a parsonage. Indeed, it is a 
small minority of churches that own parsonages. On the other 
hand, it has been proved by experience, in many places and at many 
epochs, that it is necessary to the success of a college, academy, or 
seminary that there should be a house for the president or principal, 
and in some cases houses for the professors. For example, Tufts 
College, concerning which we had such a witty and wise piece of 
testimony this morning, could not have been established by any 
possibility on that bare, bleak, treeless hill, without building at the 
start a president's house and professors' houses. It was equally 
necessary to build a dormitory and a dining-room. The new insti- 
tution could not be started without these provisions. That is one 
solid reason for exempting the president's or principal's house and 
professors' houses, when parsonages are not exempted. In some 
places this issue is a very small one to-day ; in others it is vital. 
You need not hesitate, gentlemen, out of consideration for Harvard 
College, to force the Corporation to dispose of the five or six pro- 
fessors' houses they still own. They are burdensome pieces of prop- 
erty, and are no longer needed for professors. They are desirable, 
however, for a few deans or other administrative officers. A house 
for the President still seems a necessity at Harvard, as at other 
similar institutions. I may add that, seeing this necessity, the poor 
Province of Massachusetts, in 1726, paid more than half the cost of 
building a handsome president's house at Cambridge. Are we going 
back on that, gentlemen ? Is there a man here who would be willing 
to go back in these prosperous days on that act of the Province of 
Massachusetts in the time of its poverty ? 

There is another reason that parsonages and priests' houses are 
taxed, while presidents' and professors' houses are not. We, of 
course, ought to talk as plainly as possible here. The reason is 
that there is not so much consent or agreement on the expediency of 
maintaining the ministers of the different Protestant denominations, 
the priests of the Roman Church or the Greek Church, and the rabbis 
of the Jews as there is on the expediency of maintaining the colleges 
in all their functions. Most citizens think their own church is 
clearly an institution of public utility ; but many are doubtful whether 
as much can be said for some other church or churches. This lack 
of consent on the public utility of all churches is the second explana- 
tion of the fact that parsonages are taxed in Massachusetts. 



There was reference this morning to the athletic field of Smith 
College, and then some disparaging allusions were made to the 
athletic fields of Harvard and to their history and uses. Harvard's 
principal playground now lies in Boston, on the right bank of Charles 
River. It was the gift of an eminent citizen of this Commonwealth, 
who bought it with his private money, and gave it to the University. 
He bought an area contiguous to a large marsh which lay across the 
river opposite the residence of Longfellow, on Brattle Street, Cam- 
bridge. Longfellow loved the prospect from his windows, and 
wanted to have the marshes kept open forever for public enjoyment. 
So he and some friends of his bought those marshes and gave them 
to the University. Such were the honorable sources of the great 
playground called the Soldier's Field. Why did Major Higginson 
make that costly gift to the College? For one thing, he believed in 
the doctrine that the Duke of Wellington preached, when he said 
that Waterloo was won on the playgrounds of Fton College. To 
emphasize his belief in that proposition Mr. Higginson put up on 
Soldier's Field a monument to some dear friends of his, all of whom 
gave their lives to the country in the Civil War. Is there anybody in 
Massachusetts who would consent to the taxation of that Field? Is 
there anybody who does not believe that such fields are essential to the 
proper training of our educated young men for public service and pri- 
vate usefulness? But I have heard it said by the advocates of this 
little bill that $80,000 was taken on that Field in a single day from 
people who paid $2 apiece to witness a game of foot-ball. True, per- 
fectly true ; but where did that money go to, that $80,000? Did any 
of it go into a private pocket ? No. Was any of it used except for 
the promotion of athletic sports at the competing colleges and the 
development of that Field ? Not a dollar. The whole of that sudden 
receipt was consecrated to this public use of education, — of bodily 
education, if you please, an essential part of that education. It is 
moral education, too ; for courage, public spirit, fidelity, and self- 
sacrifice are taught there. In short, we teach on that Field, through 
the acts of the Poet Longfellow and Major Higginson, what public 
spirit accomplishes. The Field itself is a striking illustration of 
Massachusetts public spirit, consecrating private property to noble 
public uses. 

We had some playgrounds before the Soldier's Field. The first 
one I knew, now nearly sixty years ago, was a little triangle of 
ground which lies north of the College, between Cambridge Street 
and Kirkland Street, a small piece of ground, about two acres 
in area. That had sufficed the College for many, many years ; but 



one day a committee of the subscribers to Memorial Hall wanted 
to put up that memorial to the services of Harvard graduates and 
students in the Civil War on that enclosure. Thereupon friends of 
the College raised money, and bought another field, farther to the 
north, a larger one, called Jarvis Field ; in order that Memorial 
Hall might be built on the first playground of the College. It was 
suggested this morning that the athletic fields of to-day might, a hun- 
dred years hence or fifty years hence, be used for other purposes. On 
that account it was doubted whether they ought to be exempted from 
taxation. Taking the delta to the north of the present site of 
Harvard College as a sample of the former athletic fields of the 
University, and admitting that the University has grown great from 
small and poor beginnings, can one conceive of a better use of an 
old athletic field than to put Memorial Hall on it ? Can any one of 
us conceive of taxing Memorial Hall or the enclosure in which it 
stands ? Is that a conceivable proposition in Massachusetts ? It is 
a clining-hall in which young men eat at cost. They divide the total 
costs among themselves. There is absolutely no profit for anybody ; 
there is no profit which can be applied to other public uses of the 
College. A poor boy can eat there for $2.80 a week, and a some- 
what richer boy can spend $4 if he likes, and the careless boy can 
spend more. They are all free to spend what they wish or can 
afford. Where else can a vigorous young man feed himself suffi- 
ciently on $2.80 a week? I do not know any club, restaurant, or 
boarding-house where a man can live as cheaply as he can at Memo- 
rial Hall or Randall Hall. Is that a help to that newsboy who got a 
scholarship in Harvard College the other day, or not? He simply 
could not afford to go to Harvard College even with a scholarship 
without such help in procuring his food. 

We heard a good deal this morning about institutions of learn- 
ing that make a profit. We even heard once about making so much 
profit per student. I think Smith College was supposed to make a 
profit per girl, because the girls paid $8 or $9 per week for board and 
lodging. In such transactions there is no profit in the mercantile 
sense. If it does not cost quite $8 or $9 per week to lodge and feed 
the girls in Smith College, if some College house in the course of a 
year clears a little surplus of receipts over expenditures, every dollar 
of that surplus goes to a public use, goes into the work of Smith 
College. I hope that this misleading use of the word profit in con- 
nection with college receipts and expenditures will be observed by 
the Committee. 



10 

We even heard that the property of colleges in dormitories, dining- 
halls, and athletic fields was used for business purposes, the impli- 
cation being that all business should be taxed. I want to illustrate 
the fallacy under that representation. Opposite the College Yard in 
Cambridge, across the street called Massachusetts Avenue, are two 
large contiguous brick buildings. They are both used mainly for 
the accommodation of students ; but on the first story there are 
stores or shops and offices. Above are students' rooms. The entire 
net income of one of those buildings goes to a private person, the 
son of a gentleman who long lived in Cambridge and built up an 
honorable and successful business in Boston. The net income from 
the other building, — and you would not notice much difference 
between the two in position, quality, or use, — goes to Harvard 
University. Now that second building is exempt from taxation, and 
the first is not exempt. Why ? Because all the receipts from the 
second building go to a public use, the. promotion of higher education, 
while the receipts from the first building go straight to a private use. 
That is the fundamental difference between what was here called 
money-making or a business carried on by a college, and money- 
making or a business in the same line carried on by a private 
person. In one case the net income goes to a public use, in the 
other to a private use. Exemption is given only when the whole net 
proceeds are applied to a public use. This is never true of an indus- 
trial or commercial establishment or of a transportation company. 
Such establishments are usually of advantage to the communities in 
which they are situated ; but their net profits go to private uses. 

Allusion was made in the remarks of the last speaker to the pro- 
priety of taxing students on their lodgings or their meals, because 
it would be a good lesson for students to pay taxes, and to know that 
the}' paid taxes, so that they should not grow up tax dodgers. 
Now, gentlemen, that rash suggestion carries us down to the very 
roots of the enormous subject which has been committed to you for 
study. What are the legitimate objects of taxation ? Only produc- 
tive things and persons and their products. The things which earn 
should be taxed for the support of public objects, unless the earnings 
are already devoted to a public object. Now these students in girls' 
colleges, boys' colleges, and technical schools are not earning any- 
thing. On the contrary, their time has been given up by their 
parents that they may study and so improve their power to earn. 
They are not yet legitimate objects for taxation of any sort. 

I want to touch finally one general principle with regard to exemp- 
tions. We have learned, — I think the greater part of the population 



11 

of Massachusetts has learned within the last ten years, — that reser- 
vations from taxation are not bad, burdensome, wasteful things, but 
on the contrary that they are highly profitable and precious things ; 
and that the question really is not how few reservations a community 
can get along with, but how many they can indulge in. The long 
and short of it is, gentlemen, that the things which make it worth 
while to live in Massachusetts, to live anywhere in the civilized 
world, are precisely the things which are not taxed ; the things 
exempted are the things which are in the highest degree profitable 
to the community. Just consider what our life would be without 
the exempted institutions of Massachusetts, the colleges, museums, 
churches, schools, hospitals, courts, libraries, gardens, commons, 
parks, all the parks, — Boston's, Cambridge's, and the Metropolitan, 
and the parks of the Trustees of Public Reservations. Just think 
what our life would be if all these things were swept away. What 
would become of family life, of social life, of public enjoyment and 
private happiness ? We get through these exempted institutions the 
joys and satisfactions and the upward tendencies which make life 
worth living. Let nobody persuade you for a moment that these 
invaluable reservations from taxation are a burden on the public ; 
they are what make the common life worth living. 



APPENDIX 



15 



APPENDIX I 



In the following states, appropriations either State or City were made 
during the year 1903-04 for the maintenance of institutions for higher 
education, including both current expenses and appropriations for buildings 
or other special purposes : — 

California $567,746 

Colorado 140,000 

Georgia 136,900 

Illinois 630,200 

Indiana 180,000 

Iowa 285,500 

Kansas 220,000 

Michigan 448,525 

Missouri 330,547 

Nebraska 282,250 

New York 308,203 

Ohio 575,781 

Pennsylvania 344,540 

Texas 165,000 

Wisconsin 471,500 

These figures are taken from the report of the Commissioner of Educa- 
tion for 1904 and do not include appropriations for schools of technology. 



16 



APPENDIX II 



EXTRACT FROM A LETTER WRITTEN BY PRESIDENT ELIOT 
DECEMBER 12th, 1874, TO THE COMMISSIONERS OF THE 
COMMONWEALTH APPOINTED " TO INQUIRE INTO THE 
EXPEDIENCY OF REVISING AND AMENDING THE LAWS 
OF THE STATE RELATING TO TAXATION AND THE EXEMP- 
TIONS THEREFROM." (House Doc. No. 15, 1875, p. 369.) 

The property which has been set apart for religious, educational and 
charitable uses is not to be thought of or dealt with as if it were private 
property ; for it is completely unavailable for all the ordinary purposes of 
property, so long as the trusts endure. It is like property of a city or 
state which is essential for carrying on the work of the city or state, and 
so cannot be reckoned among the public assets ; it is irrecoverable and 
completely unproductive. The capital is sunk, so to speak, just as the 
cost of a sewer or a highway is capital sunk. There is a return, both 
from a church or a college, and from a sewer or a highway, in the benefit 
secured to the community ; but the money which built them is no longer 
to be counted as property, in the common sense. It can never again be 
productive, except for the purposes of the trust for which it was set apart. 

When a new road is made where there was none, the State, or some 
individual, sacrifices the value of the land it covers, and the money spent 
in building the road. It also sacrifices the opportunity to tax, in the 
future, the improvements which might have been put upon that land if it 
had not been converted into a road, and all the indirect taxable benefits 
which might have been derived from the use for productive purposes of 
the land, and of the money which the road cost. When a church, or a col- 
lege, or a hospital, buys land, and erects buildings thereon, the State 
does not sacrifice the value of the land, or the money spent upon the 
buildings ; private persons make these sacrifices ; but the State does 
sacrifice, by the exemption statute', the opportunity to tax, in the future, 
the improvements which might have been put upon that land if it had 
not t^en converted to religious, educational or charitable uses, and all the 
indirect taxable benefits which might have been derived from the use 
for productive purposes of the land, and of the money which the buildings 
cost. 

This is the precise burden of the exemption upon the State. Why does 
the State assume it? For a reason similar to, though much stronger than, 
its reason for building a new road, and losing that area forever for taxa- 
tion. The State believes that the new road will be such a convenience 
to the community, that the indirect gain from making it will be greater 
than the direct and indirect loss. In the same way the State believes, or 



17 

at least believed when the exemption statute was adopted, that the indirect 
gain to its treasury which results from the establishment of the exempted 
institutions is greater than the loss which the exemption involves. If this 
belief is correct in the main, though not perhaps universally and always, 
the exemption can hardly be properly described as a burden to the State 
at large. 

The parallel between a sewer or a highway, on the one hand, and land 
and buildings of exempted institutions, on the other, may be carried a 
little farther with advantage. The abutters often pay a part of the cost 
of the sewer or the highway which passes their doors, because it is of 
more use to them than to the rest of the inhabitants, and the members of 
the religious, educational or charitable society erect their necessary build- 
ings and pay for their land themselves. If it be granted that the religious, 
educational or charitable use is a public use, like the use of a sewer or a 
highway, there is no more reason for taxing the church, the academy or 
the hospital, than for annually taxing the abutters on a sewer or a high- 
way on the cost of that sewer or on the cost of the highway and its value 
considered as so many feet of land, worth, like the adjoining lots, so 
many dollars a foot. The community is repaid for the loss of the taxable 
capital sunk in the sewer by the benefit to the public health, and the 
resulting enhancement of the value of all its territory. In like manner, 
it is repaid for the loss of the capital set apart for religious, educational 
and charitable uses, by the increase of morality, spirituality, intelligence 
and virtue, and the general well-being which results therefrom. To tax 
lands, buildings, or funds which have been devoted to religious or edu- 
cational purposes, would be to divert money from the highest public 
use, — the promotion of learning and virtue, — to some lower public use, 
like the maintenance of roads, prisons or courts, an operation which can- 
not be expedient until too large an amount of property has been devoted 
to the superior use. This is certainly not the case in Massachusetts to- 
day. The simple reasons for the exemption of churches, colleges and 
hospitals from taxation are these : first, that the State needs those institu- 
tions ; and secondly, that experience has shown that by far the cheapest 
and best way in which the State can get them is to encourage benevolent 
and public-spirited people to provide them by promising not to divert to 
inferior public uses any part of the income of the money which these bene- 
factors devote to this noblest public use. The statute which provides for 
the exemption is that promise. 



18 



APPENDIX III 



COLLEGE TOWNS HAVE NO HIGHER TAX-RATES THAN 
NON-COLLEGE TOWNS 



Cambridge 
Fall River 
Worcester 
Lowell . . 
Lawrence . 
Springfield 
Lynn . . . 
New Bedford 



Amherst . . 
Ware . . . 
Easthampton 
South Hadley 

Northampton 
North Adams 
Pittsfield . . 
Med ford . . 



Andover . 
North Andover 

Methuen . . 

Amesbury . 

Saugus . . . 

Dan vers . . 

Rockport . . 

Williamstown 
Lee .... 
Dalton . . . 
Provincetown 
Monson . . 
Belmont . . 
Lexington 
Needham . . 
Warren . . 



1905 1905 

Population 1 Assessable Prop. 2 
97,434 $103,845,600 
81,754,247 



105,762 
128,135 
94,889 
70,050 
73,540 
77,042 
74,362 

5,313 
8,594 
6,808 
5,054 

19,957 
22,150 
25,001 
19,686 

6,632 
4,614 
8,676 
8,840 
6,253 
9,063 
4,447 

4,425 
3,972 
3,122 
4,362 
4,344 
4,360 
4,530 
4,284 
4,300 



120,865,502 
71,632,643 
46,235,468 
80,904,477 
56,157,073 
64,349,661 

3,599,900 
4,398,210 
3,781,772 
2,529,372 

12,739,859 
14,862,527 
18,330,223 
21,240,150 

5,902,668 
4,462,302 
5,178,157 
5,346,227 
4,555,686 
5,341,280 
3,051,252 

3,035,747 
1,918,865 
3,017,700 
1,928,920 
1,698,168 
5,602,650 
5,957,670 
4,503,731 
1,762,743 



1905 & 1906 
Tax Rate 2 
$19.00 $18.60 
18.80 18.40 



17.00 
20.20 
16.80 
15.40 
18.40 
19.40 

16.25 
19.70 
17.00 
21.00 

17.00 
22.00 
18.50 
21.40 

16.00 
17.50 
19.30 
17.70 
18.70 
18.00 
21.00 

18.80 
18.32 
14.70 
20.00 
16.20 
19.90 
20.40 
18.00 
21.50 



16.60 
19.60 
16.00 
15.00 
17.00 
18.40 

16.25 
18.00 
17.00 
16.50 

16.50 
20.00 
18.50 
20.20 

17.50 
18.00 
19.00 
18.80 
19.80 
19.20 
18.00 

18.70 
18.05 
15.70 
19.50 
17.00 
18.00 
19.00 
18.50 
19.60 



1905 
January 1 
Exempted Prop. 3 
$25,377,063 
2,764,000 
5,922,900 
3,119,751 
1,529,625 
3,619.193 
1,515,100 
2,436,860 

2,909,099 
214,074 
583,735 

1,553,850 

4,416,607 

847,000 

1,446,754 

1,119,700 

1,873,061 

64,200 

118,050 

382,692 

77,358 

234,608 

67,000 

2,120,203 

59,725 

93,650 

50,000 

245,613 

1,664,629 

131,950 

76,455 

105,300 



1 Massachusetts census of 1905. 

2 Massachusetts Public Document No. 19 of 1905; official returns on file with the Secretary of 
the Commonwealth. 

'■■ Report of Massachusetts Tax Commissioner, for the year ending December 31, 1904. 



19 





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21 



APPENDIX VI 



EXEMPTION DOES NOT DIMINISH THE VALUE OF TAXABLE 

REALTY IN COLLEGE TOWNS AS COMPARED 

WITH OTHER TOWNS 

The Figures are for 1905 



Town Population 

Cambridge 97,434 

Fall River 105,762 

Worcester 128,135 

Lowell 94,889 

Lawrence 70,050 

Springfield 73,540 

Lynn 77,042 

New Bedford 74,362 

Somerville 69,272 

Amherst 5,313 

Ware 8,594 

Easthampton 6,808 

South Hadley 5,054 

Northampton 19,957 

North Adams 22,150 

Pittsfield 25,001 

Medford 19,686 

Cambridge 97,434 

Somerville 69,272 

Maiden 38,037 

Everett 29,111 

Chelsea 37,289 

Medford 19,686 

Revere 12,659 

Williamstown 4,425 

Adams 12,486 

North Adams 22,150 

Dalton 3,122 

Great Barrington . . . . 6,152 

Lee 3,972 



Value of Tax- Per Capita Value 



able Real 
Estate 


of Taxable 
Real Estate 


Tax 

Rate 


$87,851,500 


$901.60 


$19.00 


50,219,900 


474.80 


18.80 


95,669,850 


745.80 


17.00 


57,208,845 


602.90 


20.20 


36,224,000 


517.10 


16.80 


63,273,330 


860.30 


15.40 


46,130,000 


598.70 


18.40 


40,293,975 


541.80 


19.40 


53,392,000 


770.70 


18.30 


2,726,060 


513.00 


16.25 


3,338,805 


388.50 


19.70 


2,834,380 


416.30 


17.00 


2,144,710 


424.30 


21.00 


10,231,750 


512.70 


17.00 


12,065,012 


544.60 


22.00 


13,813,825 


552.50 


18.50 


18,393,550 


934.30 


21.40 


87,851,500 


901.60 


19.00 


53,392,000 


770.70 


18.30 


25,128,200 


660.60 


17.20 


19,951,150 


685.30 


17.80 


22,497,950 


603.30 


19.00 


18,393,550 


934.30 


21.40 


11,888,600 


939.10 


22.00 


2,680,575 


605.80 


18.80 


3,557,875 


285.00 


18.00 


12,065,012 


544.60 


22.00 


1,621,581 


519.40 


14.70 


3,767,890 


612.40 


13.50 


1,424,438 


358.60 


18.32 



LIBRARY OF CONGRESS 



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